Finding a letter from the IRS in your mailbox can ruin your day. There are several different types of IRS letters and not all of them are bad. However, the IRS audit letter is probably one of the worst. It is wise to engage an experienced tax accountant when you receive an IRS audit notice because:
Many IRS notices are incorrect. Taxpayers often pay additional taxes fearing a full-blown IRS audit if they question a notice. An experienced tax accountant can help you navigate the complexities and resolve the issue quickly. We can review the IRS notice and decide if professional services are required, or if you can easily handle the matter yourself. There is no charge for an initial consultation.
There are five types of IRS tax audits. Each type of audit requires a different type of response. The five types of Audits are:
This is not a true IRS audit. The letter highlights apparent discrepancies or errors on your income tax return. The most common reason for a correction letter is due to “matching” problems where the IRS compares income reported on Forms 1099 (interest, dividends, rent, independent contractor payments, etc…) and other information with the income reported on your return.
This is the most common type of IRS audit. The IRS will request that you mail them documentation to support specific items on your tax return. This type of audit is usually easy to resolve.
This type of audit takes place in the IRS office and usually indicates that the IRS considers your return fertile ground for potential additional taxes. You or your representative will be requested to bring documentation supporting your return. Many times the documentation request will focus on a few areas. However, sometimes the document information requests can cover an entire return. Many times the IRS agent will decide to audit additional years or additional areas of your return.
The field audit is usually associated with businesses. In a field audit, the IRS agent comes to you – this can be at your home, office or the office of your representative (which is always the best choice). Field audits can be the most expansive, often spilling over onto other years and other commonly owned businesses and related personal returns.
The Taxpayer Compliance Measurement Program (TCMP) is also known as the “IRS audit from hell.” In this type of audit, taxpayers are randomly selected to prove-up every detail on their return including names, social security numbers and even the existence of children! The IRS uses the results of these audits to design their statistical tax return scoring technique that is used to spot potential returns that need to be selected for audit.
An experienced accountant will ask you to sign a Form 2848, Power of Attorney, immediately. This will cause the IRS to communicate with your representative and not with you. This also insures that your rights as a taxpayer are respected:
- You have the right to be represented by a tax attorney, enrolled agent, or CPA during the audit. You do not have to be present at the audit interview unless an administrative summons has been issued.
- You may request that the audit interview be suspended in order to consult with a representative.
- You have the right to know why the IRS is requesting a specific piece of information.
- You have the right to make an audio recording of the audit interview if advance notice is provided.
- The IRS may conduct only one inspection of your books unless the taxpayer requests another examination or the IRS provides written notice.
Even after an IRS audit has been completed and additional tax liabilities assessed, you have several avenues of relief:
- Request abatement of penalties
- Enter an installment payment agreement
- Audit reconsideration
- And/or Offer In Compromise
We specialize in representing taxpayers before the collections and examination divisions of the IRS and state tax agencies. There is no charge for an initial consultation. Whether you choose a face to face meeting at our office or a telephone consultation, you will speak directly with an experienced CPA who will provide you with a free, confidential consultation.
We will ensure that your rights as a taxpayer are respected by the IRS. And by having us as your representative, you will no longer have to deal directly with the IRS.
While our office is located in the Dallas, Texas mid-cities area, we serve clients in almost all 50 states and have clients located in many areas around the world. All aspects of tax representation can be handled easily via phone, fax, mail and e-mail.
Please contact us for an appointment. There is never a charge for your initial consultation.
“My company was being audited by the IRS. The IRS auditor had been on our premises looking at documentation off and on for almost a year. We met with the auditor and he told us that we were going to owe more than $500,000 in additional taxes for just one year and that there were multiple years involved. Our CPA told us that we would have to find a way to pay it. We knew that there was no way this could be accurate. Our company had never even made that much money.We began to call other CPA firms to find out if there was anything we could do. We called Meredith & Associates and Karen Meredith came to our office and spent about 2 hours reviewing our financial statements, tax returns and asking a lot of questions. Karen then arranged to meet with the IRS auditor. After meeting with the IRS auditor, Karen met with us and explained the tax issues to us in laymen’s terms. For the first time, we understood the accounting issues that were causing the problem. Karen was able to ask us more questions, and determined that our entire accounting process was wrong. We had been using the wrong accounting method to account for our business. If we corrected our accounting method, the IRS adjustment would be zero.Karen met with the IRS auditor for a second time and showed the auditor all of the supporting documentation for the accounting method error. The auditor agreed that the Company’s accounting was not accurate. The Code and Regulation he was relying upon did not apply. The IRS auditor agreed that we did not owe additional taxes. We then hired Meredith & Associates as our CPA firm. They helped us change our accounting processes and also simplified our bookkeeping. Not only did Meredith & Associates save us hundreds of thousands of dollars in taxes, they also helped us save money simplifying our accounting.”
– Marwan S.